Budgeting 101: Cash Envelope System

cash envelope systemCash envelope system is a time-tested budgeting technique which has been around for years. If you’re still a newbie when it comes to budgeting you need to exert additional effort in monitoring your expenses first. You’ll have to do this until such time you understand your spending habits. If you’re considering a new way of budgeting, I totally recommend this cash envelope system to you.

Budgeting 101: Cash Envelope System (Quicklinks):

1. Save More Using the Cash Envelope System
2. My New and Improved Envelope System
3. Frequently Asked Questions (FAQ)

Save More Using the Cash Envelope System

This is the budgeting technique I’m currently using which helped me in setting aside more money for my savings and investments. What I really love about this system is that it’s very easy to follow. Literally, anyone can do this.

Monitor Your Spending Habits

This is the first step and the most commonly neglected part of all. Never try to skip this part if you want to make this budgeting a success. Remember that you can never control something you don’t measure. Try to list down your expenses every single day, you read that right, every single day! And then group them into categories like transportation, food expenses, utility bills, etc.

Now that you have them listed, you may now work on it. Tick off some unnecessary expense you feel you can live without like taking a grab ride. If you can go to the same place by taking a bus or a jeepney ride then do it. Imagine the extra money you the can add to your savings.

Use the 20-50-30 Rule

I’ve to guess you know this one, right? If you follow my Facebook fan page then you might have come across to this so-called 20-30-50 rule. The is a short way of dividing your money by allocating 20% to your savings first before spending on your needs and wants. The remaining 50% is for your need and the other 30% is for your wants.

Do you know what makes savings harder? It’s depriving yourself. Come on guys, give yourself a break. There’s nothing wrong with enjoying the fruit of your hard work. Afterall, you only live once so spend it well just remember to do it in moderation.

Divide and Allocate Money in Each Envelope

What I usually do every payday is to withdraw a certain amount I need to budget for the next two weeks. If I’m earning Php 40,000 per month, excluding the taxes and contributions, then every cutoff off I’ll be receiving Php 20,000. The first thing I do is to just get what I need which is Php 16,000, setting aside the Php4,000 as my savings (recall the 20% thingy?). Don’t forget to insert the money into their respective envelope.

Remember to live within your means. If you allocate 2k for your transportation then don’t go over the budget. This is where discipline will be made. Don’t touch your food envelope just to buy the shirt or shoes you like. If you don’t have a budget for it then don’t buy it!

Transfer the Excess and Repeat

This is the most exciting part for me checking if there’s still money left in each envelope after 2 weeks. By the way, I do this every two weeks because I get my earnings in a semi-monthly scheme which most of us usually does. If you get yours every month then repeat this monthly.

What I usually do with the leftover money, this is the kind of leftover I like hehe, is I put it back into my savings account. Woohoo, thus leveraging my savings game. I know a few that spend this amount on their wants but I’m not that kind of person. If you like, you may do that as well.

My New and Improved Cash Envelope

I’m using this system for quite a while now and my brown paper envelopes has started to rip apart so I decided to make a customized one. I used my old clear book which I used when I was still in high school and cut it to a size that can fit my bills. This is how it looks. It’s simple and durable. I hope it’ll last.

Frequently Asked Questions

Do I Need to Carry the Envelope Whenever I go out?

No, you don’t have to carry it just take the amount you need from an envelope.

What if I Get a Salary Increase?

I suggest adding your increase to your savings account. Salary increase doesn’t mean you need to increase your spending.

What Should I do If I Emptied an Envelope?

The true challenge in using this system is not to empty envelope before the next cutoff. You must learn to live on your budget but if this happens then borrow from your wants envelope. Refrain from doing this often as this won’t help you at all in managing your expenses.


While budgeting is a good start in managing your money efficiently, this may not be enough to achieve financial freedom. So don’t just save but invest also in financial vehicles that can accelerate and help in achieving your goals. You may consider building a strong financial footing with a life insurance plan, VUL in particular from Sun Life called Sun Maxilink Prime. This will help you financially secure your future while growing your money over time.

READ: Sun Maxilink Prime | The Best-Selling VUL Plan of Sun Life


4 comments… add one
  • Danica Calangi Link Reply

    Hmmmp. Matry nga to starting this month. 😂😂😂 . Thanks for the info bes 😂

    • Federico Suan, Jr. Link Reply

      Thanks Nica for dropping by. Woohoo, did you just read it? Sobrang effective niya Nics control kung control ang spending when you use this. Happy saving hehe

  • Jim Limarez Link Reply

    This is really helpful. I did the cash envelope system for about 6 months, and now, I am accustomed into spending in a fixed budget even without keeping them separately. Thanks for the tip!!

    • Federico Suan, Jr. Link Reply

      Hi Jim. Some people would say no this is kinda stup*d or whatsoever but in reality, this is super clever right? Most of us would think that it’s very outdated BUT it’s super duper effective. They have a saying like “out of sight is out of mind” and this system works because it’s very visual. This ain’t an app that you can download on your play store. It employs all your senses (well excluding the taste nonetheless you wanted to try, just kidding hehe) because you can see, feels, and even smell the money.

      I guess it boils down to effectiveness plus you just need to do it until such time you become accustomed to it. Thanks for reading. I hope you read some of my other articles.

Leave a Comment